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Old 10-21-2015, 07:14 PM
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New Business License, Retroactively Claim Expenses?

Hey folks,

I have been a 1099 Independent Contractor for all of 2015. The company has been cutting me bi-weekly checks made out directly to me, which I deposit in my personal checking account. I have recently been told that I should acquire a business license, set up a business account and invoice the company for my work. All transactions would then run through my business account. I would then be able to deduct items such as my home office, mileage, etc..

My question is: Since I would be getting a business license so late in the year, would I be able to still claim any expenses through the business account that were incurred earlier this year? I've had my home office all year, but I haven't had my business license all year. My work will not change at all due to a business license, it seems like it would just be more of a formality.

For example, if my 2015 expenses amount to $5,000 (1k from November - end of year & 4k from beginning of year - November) can I only claim those $1,000 or can I claim the whole $5,000.

Any advice is appreciated.

Thanks,

John



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Old 10-23-2015, 05:01 AM
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Join Date: Oct 2010
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I have been a 1099 Independent Contractor for all of 2015. The company has been cutting me bi-weekly checks made out directly to me, which I deposit in my personal checking account. I have recently been told that I should acquire a business license, set up a business account and invoice the company for my work. All transactions would then run through my business account. I would then be able to deduct items such as my home office, mileage, etc..

My question is: Since I would be getting a business license so late in the year, would I be able to still claim any expenses through the business account that were incurred earlier this year? ========>Yes; For filing a tax return, the IRS does not ask for any business license information. However, you need to get a biz license issued by your state and/or municipality immediately. Doing business without a license is usually a violation of state and/or local laws, and the fines for doing so can be harsh. You may be also be in a business which requires the collection and remittance of sales tax in your jurisdiction.

I've had my home office all year, but I haven't had my business license all year. My work will not change at all due to a business license, it seems like it would just be more of a formality.====>As said above, the IRS doesn't care if you have a biz license or not. You are required in any case to report the income on a tax return, and pay tax, if it's $400or over $400 for the year. You can still claim biz related expenses on your Sch C of 1040.

For example, if my 2015 expenses amount to $5,000 (1k from November - end of year & 4k from beginning of year - November) can I only claim those $1,000 or can I claim the whole $5,000=====>the whole $5k aslongas it is business related expense; any "ordinary, necessary, and reasonable" expense that helps you earn business income is deductible.



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